Quote from: PerfectClam on April 11, 2018, 11:30:15 AM

I think self-regulating organizations should act within certain legal framework (almost any country have specific frameworks on that account). However what I don't understand is how this organization can actually influence worldwide policy and regulators attitude?

Hi PerfectClam,

This organization is specifically focused on the United States, though much of the work it does in terms of laying out best-practices standards could be applied to other countries as a template. In the U.S., Self-Regulatory Organizations defined slightly differently under the Securities Exchange act and the Commodity Exchange Act. However, these organizations are essentially a type of non-profit, industry-funded association that is delegated some amount of authority under the law to "self-police" the activities of its members.

There are several SROs for securities, the most prominent one being FINRA (the Financial Industry Regulatory Authority). As far as I know, there is only one under the purview of the CFTC for commodities, the National Futures Association.

What we are doing here is founding a new organization that will help to bring regulatory certainty to the U.S. market, arguably the largest market for crypto assets in the world. FinTech SRO will establish a form of "self-regulation" that will reduce fraud, protect consumers and investors, and increase the credibility of the market.

Many businesses and organizations are staying clear of the crypto asset market at this time and one of the largest reasons they give is because of the regulatory uncertainty. An organization like FinTech SRO will work with the regulators and develop reasonable, affordable, and "light-touch" frameworks to comply with regulations that will balance the need to protect participants and the important objective of not harming innovation or slowing the crypto asset industry.

By soliciting out for founders, we are offering the opportunity for people across the industry to get involved in this organization from the beginning. My personal focus is just as described above, making sure that innovation is not stifled by regulations that were built for legacy finance. Crypto assets are profoundly different, and guidelines and best-practices need to accommodate this difference. There are other things that can be gained by working together, such as advocating for a clear definition of crypto assets (so that each agency doesn't decide that cryptos are /theirjob/). The situation we have now is that depending on which regulator is asking the question, cryptos can be considered an asset property, commodities, money, prepaid value, and securities. Bitcoin in my view is most certainly a form of money. ICOs can be prepaid tokens or securities, depending on their characteristics. However, many legal analysts and advisors have interpreted the laws their own way without clear guidance that has been endorced by the regulators, so a common system to determine how a given crypto asset should be classified is something will benefit all participants. Why should, say, Coinbase have to analyze one crypto asset and some other exchange analyze the same asset to determine what it is? A standard definition and process for classification will help. In that hypothetical, what if the two exchanges didn't agree? How would the regulators deal with that?

There are a number of things that multiple organizations can accomplish by launching an SRO. Another thing I want to make sure of is that "non-entity projects", such as Bitcoin, are not regulated out of existence. The very nature of decentralized crypto assets means that many of them do not have a central point of governance or control, and this should not impede their ability to become the predominant type of money used in the world.

In terms of worldwide policy, organizations can and do participate in international agreement bodies such as G20 and UN. While they don't have an actual "vote", per se, they participate as observers and provide comment on their views to the various countries or bodies that do have votes.

I am new to crypto asset regulation (has it even existed long enough to claim that anyone is an expert?), but I have experience in launching other types of SROs and in building and implementing best practices standards that are reasonable. That's what I'm focused on doing here.

Best regards,
Ben